The essays in this thesis study stock option schemes and CEO compensation in the publicly listed Finnish firms. The first essay studies the determinants of option scheme adoption. It argues that firms with a higher level of market value per employee are able to provide economic incentives for their personnel at a lower cost, thus encouraging the use of options. In addition, share returns from the past year affect the adoption of selective option schemes, but not broad-based plans. The second essay presents empirical evidence on the productivity impacts of stock option schemes. It shows that when endogeneity and dynamics of options are taken into account, there is no statistical evidence on the link between option schemes and firm productivity. The finding is consistent with the hypotheses that predict negligible effects of option plans on firm performance. The third essay studies whether, instead of productivity, option schemes affect firm technical inefficiency. The findings indicate that in the manufacturing sector broad-based scheme firms have higher mean inefficiency than selective or non-option firms. There is also no statistical support for the hypothesis that option schemes may reduce firm technical inefficiency. The fourth essay studies statistical relationships between CEO compensation, firm performance and firm size. It shows that CEO average compensation has increased substantially in 1996-2002. However, the change in CEO compensation, and especially in the total compensation, can be associated with changes in stock market-based measures of firm performance, such as shareholder value and share return. Also, changes in both accounting (ROA%) and stock market-based firm performance measures in the previous year can be associated with the change in CEO compensation in the following year. CEO pay-for-firm size elasticity is estimated to be close to 0.3.